Letter to WSJ

Rahm Emanuel’s “Wal-Mart Thrives When Democrats Are in Charge” makes an argument similar to that of Larry M. Bartels in his recent book, “Unequal Democracy,” that the performance of the American economic in arbitrary four-year periods has a single explanation: the political party of the President “in charge.”

To begin with, this argument assumes--in true liberal fashion--that an economy responds immediately and in orderly fashion to the economic policy of the country’s leader, ignoring the many factors that go into economic performance—9/11 perhaps? The business cycle? War? Natural disasters? The growth of the Chinese and Indian economies leading to higher commodities prices?

Secondly it assumes that economic policies take effect on the day a President takes office and end the day he leaves—assuming therefore that Carter’s policies had no effect on the early Reagan years and that Reagan’s policies had nothing to do with the boom of the 1990s that Clinton presided over.

Thirdly, the President does not have unlimited power over economic policy. He appoints an independent Fed Chairman (and Clinton was wise enough to keep Reagan’s appointee, Alan Greenspan.) Congress writes the budget and it is common for Congress to be controlled by a different party than the President.

Finally, it might be helpful to analyze actual economic policy rather than simply the party affiliation of the President. Mr Emanual cites Clinton’s budget surplus to explain the robust economy in the 1990s, and Bush’s big spending ways to explain the slower economy. In his own article he therefore argues that fiscal conservatism is better for the economy. Perhaps I missed Barack Obama’s call for fiscal conservatism. From what I have heard, Obama seems more concerned with raising taxes and expanding government to assist the reputed victims of the Bush economy.

To say that Bill Clinton and Barack Obama are both Democrats and therefore the economy will do better under Barack Obama is simplistic in extreme—with obvious political motivation.